CFTC Warns Prediction Markets Over Manipulation Risk in 'Mention' Contracts

The regulator stopped short of prohibiting the contracts. Instead, it said operators wishing to list them should show safeguards such as independent verification, substantial public scrutiny, and monitoring of trading for manipulation. It added that contracts could be reinforced by external factors that make manipulation difficult or costly, by limits on the ability of public pressure to shape outcomes, by a formal public setting involving a public figure, and by close monitoring of trading activity.

The guidance arrives as prediction markets including Kalshi and Polymarket broaden the range of event-based contracts available to traders. BitKE noted the CFTC has also recently acted against conduct involving inside knowledge, including a penalty imposed on a former White House teleprompter operator.

Separately, Kalshi said it is not under CFTC investigation over its trading activity. CoinDesk reported that the platform attributed unusual patterns in its ether perpetual market to liquidity incentives.

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